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Audit Report: IG-0862

April 10, 2012

Use of Noncompetitive Procurements to Obtain Services at the Savannah River Site

In 2009, Savannah River Nuclear Solutions, LLC (SRNS) awarded two noncompetitive contracts for personnel services to two of its three parent companies, Fluor Federal Services, Inc. (Fluor) and Newport News Nuclear, Inc. (Newport). We found that SRNS had not always met its contractual obligations when acquiring services from its affiliates. Specifically, SRNS had not obtained required Department of Energy (Department) approval for the two noncompetitive contracts it awarded to Fluor and Newport News during 2009. Also, SRNS had not demonstrated, in most cases, that the affiliates were the only sources capable of providing the expertise necessary to perform the needed services, a pre-requisite for noncompetitive awards to affiliate companies. Further, it had not performed cost analyses to ensure the reasonableness of the cost of affiliate personnel services, as required. The noncompetitive acquisitions occurred and persisted because the Department did not effectively administer the SRNS contract as it pertains to the procurement of affiliate personnel services.